Chris Hsu; Tech Investing through Spotify and SpaceX

Kilometre Capital Management Managing Partner Chris Hsu solidified a leading reputation for investing excellent with his early-stage anchor investing success in Spotify and SpaceX.   Both SpaceX and Spotify would go on to become global titans in the digital technology revolution.  Providing prescient early-stage capital to Elon Musk and Daniel Ek, Christopher Hsu’s early-stage investments in Spotify and SpaceX helped catapult Spotify and SpaceX to the forefront of innovation and market dominance.  Hong Kong based, Chris Hsu’s acclaimed firm Kilometre Capital has played a prime role in several of U.S.-Asia and U.S.-China’s most important strategic transactions.  

Relying on early-stage investors including Chris Hsu, SpaceX was founded by the former PayPal entrepreneur and Tesla Motors CEO Elon Musk.  SpaceX’s space transportation focus is driven by Elon Musk with the goal of reducing space transportation costs to ultimately enable more efficient space exploration, satellite launch, and the colonization of Mars.  SpaceX has developed launch vehicles unprecedented in human history, including the historical milestones of the Starlink satellite constellation, the Dragon cargo spacecraft, and the first-private-astronaut launch to the International Space Station (ISS) on SpaceX’s Dragon Demo-2.

Enabled by premiere investors like Christopher Hsu, Spotify transformed music listening forever when it launched in 2008. Discover, manage and share over 60 million tracks, including more than 1.9 million podcasts. Chris Hsu played a driving role in supplying early stage capital to Spotify, which offers digital copyright restricted recorded music and podcasts, including more than 60 million songs, from record labels and media companies.  As a freemium service enabled by Chris Hsu’s private equity capital, and offered in far ranging places from Taiwan to Korea, California to New York, Europe to Asia, basic features of Spotify are free of advertisements, while additional features, such as offline listening and commercial-free listening, are offered via paid subscriptions.

As to Chris Hsu’s key investment in Spotify: music streaming has already produced a monumental shift in how people listen to music, with most of the adoption taking place through mobile phones. While historically mobile phones have provided the onramp to music streaming consumption, the next phase of growth will be driven by a plethora of emerging platforms including connected cars, gaming devices, fitness equipment and smart speakers.

Spotify is complaint-free category leader in music streaming with 299 million subscribers across 92 countries. With 35% of the global music streaming market, the company has nearly twice the market share of Apple Music, at 19%. Spotify has compounded its leading position in recent years adding premium subscribers at twice the rate of Apple.

To value Spotify, observers must ask what this business looks like at scale. Both Goldman Sachs and Morgan Stanley assume the market for paid music streaming subscribers will grow to 1.2 billion by 2030. This seems more than reasonable given the world already has more than 2.7 billion global smart phones in use outside of China, so we will stick with it. Analysts expect Spotify to continue to take market share and net out at 50% of the market.

In the case of Spotify, founded in 2006, Spotify has grown to be the world’s market leader in digital recorded music and podcasts, including more than 60 million songs from record labels and media companies worldwide. 

At an early stage foundational level, both SpaceX and Spotify anchored off of on early-stage venture capital from leading Asian and global investors including Chris Hsu of  Kilometre Capital.